Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
US Leading Index (includes yield curve)
Old 12-04-2018, 04:41 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 6,666
US Leading Index (includes yield curve)

Since there is so much focus on parts of the yield curve, I thought I'd put this view out for comment. Below is a graph of the Fed's series called "US Leading Index". One component in this is the yield curve defined as the 10 year Treasury minus the 3 month Treasury.

Below is a chart showing the US Leading Index (blue) plus the yield curve (red). Notice how the US Leading Index is in positive territory consistent with a healthy economy...so far. Notice also that the yield curve could invert and the Leading Index can hold up for some months before a recession develops. Notice that the 10 year minus 3 month yield curve is pretty positive right now compared to past pre-recession periods (recessions are the shaded areas in the chart).



Here is the definition given for the US Leading Index series. This US index combines several state indexes:
Quote:
The leading index for each state predicts the six-month growth rate of the state's coincident index. In addition to the coincident index, the models include other variables that lead the economy: state-level housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill.
My own data comparing the stock market declines in recessions versus the yield curve shows that the yield curve is one important component in signalling a bear market but not sufficient to pull the trigger. In other words, the yield curve could invert (10yr minus 3 month) but other factors like rising unemployment, high valuations (like PE10), etc. are important contributors too. So viewing yield curve inversion the day it happens (and it has not happened for the 10 year minus 3 month) is silly.
Lsbcal is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Inverted yield curve modhatter FIRE and Money 2 01-14-2006 03:35 PM
Yield Curve Inversion Helen FIRE and Money 10 09-12-2005 02:39 PM
Inverted Yield curve for bonds? Roger_R FIRE and Money 4 07-30-2005 08:27 PM
Yield curve warning signs brewer12345 FIRE and Money 53 06-07-2005 05:33 PM
Yield Curve Marshac FIRE and Money 1 09-08-2004 01:28 PM

» Quick Links

 
All times are GMT -6. The time now is 11:07 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×